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No easy answers when managing financial conflicts

From the June ACP Observer, copyright 2005 by the American College of Physicians.

SAN FRANCISCO—At an Annual Session presentation on managing financial conflicts of interest in medicine, panelist James L. Naughton, ACP Member, described a letter sent to his practice that illustrated the thorny issues physicians face on a daily basis.

The letter was from a pharmaceutical benefits management (PBM) company, saying it had made a controversial drug the statin of choice on its formulary. The problem? Dr. Naughton, whose practice is in Pinole, Calif., said he doesn't feel comfortable prescribing that particular drug.

The company's decision poses a number of financial conflicts, Dr. Naughton said. Patients covered by that PBM, for example, will face much higher copays if he doesn't switch their prescriptions from other statins—even if those drugs have worked well for years.

If he continues to prescribe other statins, his own income and that of his group could take a hit. "I will get a pharmacy report card at the end of the year on my compliance with formulary recommendations," Dr. Naughton said, "so I'll be dinged if I don't change."

And the formulary change could affect an even larger group of physicians. If enough individual physicians refuse to prescribe the statin, he explained, the independent physician association to which they (and his own group) belong could lose bonuses related to formulary use.

It's one example of the barrage of conflicts physicians must navigate in what Dr. Naughton called "a uniquely American experiment" in market-driven health care. At the Annual Session presentation—convened by the American Board of Internal Medicine (ABIM) Foundation as part of its ongoing focus on professionalism—Dr. Naughton and other panelists examined the financial conflicts physicians face.

Long list of conflicts

According to Dr. Naughton, the central conflict for primary care physicians revolves around what he described as "the dilemma of the next appointment." While fee-for-service reimbursement gives physicians incentives to see patients more frequently, capitation rewards them for seeing patients less.

Salaried physicians may seem to avoid those dilemmas, but even that is changing. "We're increasingly seeing productivity incentives being built into salaried contracts," he said, "which essentially recreate the fee-for-service paradigm."

Besides, he explained, conflicts of interest that revolve around volume are only the beginning of the problem. The daily decisions of health plans—like formulary switches—are a chronic source of financial conflicts for doctors.

Hospitals create conflicts for physicians by offering board directorships or recruiting subsidies. And many physicians must manage conflicts posed by practice ventures, such as owning their own labs.

Then there are ethical issues that stem from physicians' interactions with drug and device companies. While most physicians insist that "gifts" from industry representatives, such as lunches or continuing medical education (CME) opportunities, don't influence what they prescribe, data suggest otherwise, Dr. Naughton pointed out.

According to the newly revised ACP "Ethics Manual Fifth Edition," "[t]he acceptance of even small gifts has been documented to affect clinical judgment and heightens the perception (as well as the reality) of a conflict of interest."

Dr. Naughton said his 14-physician practice stopped seeing drug reps two years ago, primarily because the physicians felt reps had become disruptive to office staff. Several of his peers worried that the samples they relied on to treat under- and uninsured patients would disappear. But according to Dr. Naughton, "giving physicians samples is so essential to pharmaceutical marketing that our supply has continued unabated."

Under pressure: academic centers

Academic medical centers are also undergoing increased scrutiny. That's why a collaboration between the ABIM Foundation and the Institute on Medicine as a Profession (IMAP), a New York-based research institute focused on medical professionalism, is exploring those issues.

Panel member David J. Rothman, PhD, founder and president of the IMAP, said the two organizations are developing principles that target industry conflicts for academic centers because "the marketplace, left to itself, seems unsatisfactory." At the same time, he said, medicine does not want to see the government or corporations impose their own regulations on academic centers' relationships with industry.

The principles divide academic centers' interactions with industry into different activities, with recommendations on how to manage conflicts within each one.

Certain activities—such as physicians accepting industry gifts or serving on drug company speakers' bureaus—should be eliminated outright, according to the principles.

For others, the ABIM-IMAP group has proposed creating a conflict-free central facility within each academic center to help disperse drug company funds. Teaching hospitals would collect drug company funds that support travel for physicians or provide direct or faculty support for CME. Then, they would distribute those funds to physicians and programs, instead of drug companies paying physicians or institutions directly.

"We want to move pharmaceutical company funding from the marketing to the philanthropic side of the ledger," Dr. Rothman said. "We're asking that the branding that goes on with physicians or fellows be removed." Already, he pointed out, some academic centers and medical groups are adopting similar proposals.

Internists react

Audience members had a wide range of comments on the proposed principles and on the issue of how to manage financial conflicts of interest.

One internist, who said he allows drug reps to hold lunches every week in his office, emphasized that his income depends not on drug company largesse, but on satisfied patients. "I don't care how much you talk to me about your product," he said. "If the net result isn't a patient who is getting good care, then I'm not going to use it."

He went on to express frustration with the notion that anything else but patient care is driving the actions of most physicians: "You're doing a disservice to us in private practice when you don't realize that our No. 1 issue—good patient care—self-rewards us."

But an audience member from Fresno, Calif., said the principles outlined by Dr. Rothman didn't "go far enough." He suggested that the government should get involved and give drug companies tax breaks on the portion of their revenue that funds CME.

Another internist went a step further, suggesting that health plans should be tapped for CME support. "We shouldn't let insurers that profit handsomely from physicians get off free," he said.

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